Restaurants and similar food and beverage businesses were and still are, among the most negatively impacted by COVID-19. In our own research, food and dining small businesses struggled with ever-changing safety regulations, lockdown schedules, as well as maintaining cash flow and forecasting for the future.
This has made it incredibly difficult for many restaurants to effectively recover due to consistently missing revenue opportunities. It appears that some relief may now be available with the announcement of a grant program specifically targeting restaurants, bars, and other related businesses. Read on to learn more about the Restaurant Revitalization Fund and how to apply.
What is the Restaurant Revitalization Fund?
As part of the American Rescue Plan Act, the SBA announced the Restaurant Revitalization Fund (RRF) to provide funding equal to pandemic-related losses for restaurants and other food and beverage businesses. Similar to the Paycheck Protection Program, this $28.6 billion program is designed to not be repaid as long as funds are used for eligible expenses before March 11, 2023.
Applications for this grant program are now open. You can register through the SBA to begin your application, which walks you through eligibility criteria and other general information. You can also download the RRF Program Guide for additional information about applying.
Who is eligible for the Restaurant Revitalization Fund grant?
The general criteria for RRF eligibility are if your small business is a restaurant, bar, or other related business that lost revenue in 2020 compared to 2019. The types of establishments considered to be eligible include:
- Food stands
- Food trucks
- Food carts
- Tasting rooms
- Licensed facility or premise of alcohol producers where customers may taste, sample, or purchase products
However, if your restaurant is owned by a state or local government, is part of a publicly traded company, or if you own more than 20 restaurants, you are not eligible to apply. This excludes franchisees, as long as you do not own and operate more than 20 franchise locations.
Additionally, for the first 21 days, the SBA is planning to prioritize application reviews for small businesses owned by women, veterans, and socially and economically disadvantaged individuals. After that three-week period, applications will then be reviewed in the order they are received.
How to apply for the Restaurant Revitalization Fund
This program functions similarly to the SBA’s Disaster Loans. You will apply through the SBA, who through their approved lending partners, will administer and disperse the RRF grants. You can currently apply through the SBA website or through your trusted point-of-sale (POS) provider. This includes:
- NCR Corporation
If you operate using one of these POS partners, you can work through an integrated application process. Teams from these organizations will provide assistance with documentation and lead webinars to help walk you through the application. As of now, you’ll still work through the SBA application portal, and likely need to connect with a contact from your POS provider to receive the additional assistance.
What documents do you need to apply for the Restaurant Revitalization Fund?
For this application, the required documentation needs to showcase if a business has been negatively affected due to COVID-19. This will include tax information approved by the IRS, with the IRS 4506T form being signed during the application process. Additionally, the following documents are viable as proof of gross receipts:
- Tax returns — IRS Form 1120 or IRS 1120-S
- IRS Forms 1040 Schedule C or IRS Forms 1040 Schedule F
- Bank statements
- Externally or internally prepared financial statements, such as income statements or profit and loss statements
- Point-of-sale report(s), including IRS Form 1099-K
- Partnership IRS Form 1065
Additional documentation for specific business types
If your business qualifies as a brewpub, tasting room, taproom, brewery, winery, distillery, or bakery — you’ll also need to include documents that show that onsite sales to the public make up at least 33% of gross receipts for 2019. This may include Tax and Trade Bureau (TTB) Forms 5130.9 or TTB. If you opened in 2020, you need to showcase that your business model considered or included at least 33% of gross receipts coming from onsite sales.
If you operate an inn, you must showcase this same 33% onsite gross receipts qualifier for the sale of food and beverage.
What can Restaurant Revitalization Funds be used for?
The eligible expense for this grant is fairly similar to those found in the PPP program. They must be incurred over the covered period, which in this case is from February 15, 2020, to December 31, 2021.
Eligible expenses include:
- Payroll costs
- Payments of principal or interest on any mortgage obligation
- Rent payments, including rent under a lease agreement
- Maintenance, including new outdoor seating construction
- Supplies, including PPE and cleaning materials
- Food and beverage inventory
- Covered supplier costs
- Operational expenses
- Paid sick leave
This may not be the full list of eligible expenses, with any other expense the SBA says is essential to maintain operations also being viable.
How much grant money can you get from the Restaurant Revitalization Fund?
The application process will help you determine how much grant money your business is eligible for. However, the general rule is that you are eligible for funding equivalent to your 2020 gross revenue minus your 2019 gross revenue and PPP loan total.
If you’ve been operating throughout 2019 and 2020, you can receive a grant of up to $5 million as a single restaurant or up to $10 million if you’re a restaurant group. If you have not been operational for the entirety of 2019, the maximum grant amount you can receive is the average 2020 monthly gross receipts minus the average 2019 monthly gross receipts and PPP loan total.
Additionally, if your restaurant was not operational for the entirety of 2020, you can receive a grant that covers eligible expenses accrued from February 15, 2020, to March 11, 2021, minus your 2020 gross receipts and PPP loan total.
Again, this total will be found during the application process. However, having a rough idea ahead of time can better help you prepare to manage and forecast the funds you’ll receive.
Preparing to apply
The RRF is a fairly straightforward grant program, designed to help small businesses succeed in their application. If you want to start preparing to apply, you might want to review this FAQ from the SBA or work through a sample application.
Additionally, you can start putting the necessary documentation together by either retrieving specific tax forms or producing copies of your income statements or profit and loss statements. If you’re a LivePlan user, you can simply produce PDFs of your 2019 and 2020 statements straight from the LivePlan Dashboard. And similar to if you acquired PPP funding, you can start working with your grant total directly within LivePlan to make sure you’re managing it correctly.